Another Late Day Rally Lifts Stocks near the Highs of the Session

The S&P 500 continued its yo-yo action finishing in the green today as volume fell across the board ahead of the Non-Farm Payroll figures. Once again in the last 15 minutes buyers stepped up and pushed stocks higher into the close. It has become clock work at the end of the day buyers are appearing supporting the market. Jobless claim figures jumped more than expected just as momentum had been to the upside. Small caps were able to jump into the lead after lagging the broader market this week. Major market averages remain above their respective 50 day moving averages and we remain in an uptrend. Commodities fell again today even as the dollar rose on the day. Natural gas still is in an uptrend completely ignoring what is going on with other commodities. SLV and GLD continued to slide lower confusing many inflationist. Remember, GLD and SLV represent paper and are not replacements for actual coinage. There is a reason gold and silver coins are in high demand and is not translating over to the paper representation of the metals. The entire commodity complex is not saying to the market the global economy is healthy. Interesting to see the number of Bulls remain in the mid-30s from the AAII survey respondents. Bears remained in the 20s. II Bears continue to come in under 20% and bulls above 50%. QE certainly has kept many bullish expecting the money printing to keep prices high. This may be true, but we are in unchartered waters and with the Bank of Japan jumping the shark anything is possible. Tomorrow Non-Farm Payroll figure will dominate CNBC for majority of the morning. The Federal Reserve has now put the Unemployment rate in big bright neon lights. Given our PMI figures released earlier this week it wouldn’t surprise me if the jobs number comes in slightly under expectations. This is just a guess and I wouldn’t even bet my worse enemy’s money on what I think may happen. We are in an uptrend and while we are seeing signs of it weakening we aren’t going to guess when this uptrend will end. We’ll stay disciplined. Cut your losses and have a great weekend!

Stocks Pullback in light Volume as the Market trades in a Tight Range

Today was largely an uneventful day as volume was well below average and well under Friday’s level. Sellers continue to be on vacation as buyers were able to lift the market into the close. AAPL was the talk of CNBC, but the stock remains in no man’s land despite the potential for the company to return cash to its shareholders. The Yen continued its decline as the Bank of Japan is hell bent on destroying its currency. In commodity land crude oil jumped back to 97 and appears the commodity is headed above par. It remains to be seen if these high crude prices will hurt the economy. We remain in our uptrend and at this point we don’t see enough evidence it will end any time soon. Tomorrow we’ll get the President’s view of the state of the union where we’ll l likely hear about new spending measures. FSLR and SCTY moved and while we have high crude oil prices the President will likely renew his call to invest in solar. We simply see two stocks moving and at the moment it appears the industry is improving. Free government money is nice and when you couple it with higher crude prices solar certainly looks like a hot industry. Europe continues to have issues and the DAX closed below its 50 day moving average again. The EURO has gained quite a bit because at the surface the ECB is not set out to destroy it. Our short-term trend model has been long FXE for quite some time. How long will it last? It is anyone’s guess, but for now the currency is in an uptrend. The Yen continues its decline and the dollar remains stuck in the middle. Currency markets have a funny way of making headlines and for now FXY and FXY remain in solid trends. Bulls are looking for a correction to buy and bears are looking for a correction to sell. Sentiment continues to be bullish, but either camp has yet to win. Remember to have a game plan in place! TICKER ST TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/11/2013 151.77 -0.02% IWM UPTREND NO CHANGE 2/11/2013 90.70 -0.11% QQQ UPTREND NO CHANGE 2/11/2013 68.01 0.03% USO UPTREND NO CHANGE 2/11/2013 35.12 1.21% UNG DOWNTREND NO CHANGE 2/11/2013 18.45 0.49% GLD DOWNTREND NO CHANGE 2/11/2013 159.70 -1.16% SLV UPTREND NO CHANGE 2/11/2013 30.00 -1.41% DBC UPTREND NO CHANGE 2/11/2013 28.45 -0.35% FXY DOWNTREND NO CHANGE 2/11/2013 104.42 -1.20% FXE UPTREND NO CHANGE 2/11/2013 132.94 0.26% TLT DOWNTREND NO CHANGE 2/11/2013 117.12 -0.08%

European Fears Renew as Stocks Fall; VIX Jumps

Europe kicked off the selling with Spain and Italy taking on the brunt of the selling. The DAX fell 2.5% as the index fell in heavy volume erasing last week’s gains. Volume on the state side fell, but Monday’s have been light in general. Technology stocks led the decline followed by financials as NFLX bucked the trend and pushed higher. The VIX jumped above the 14 level as the fear index jumped to its highest level since the 3rd of January. Monday’s close didn’t help out the situation as sellers had the upper hand sending the market to the lows of the session. Today is just one day, but we did see a slight change in character as we have seen the market get support in the final 30 minutes. Our uptrend remains, but we are certainly on watch for our exit signals. It is no surprise Europe is back in the spot light has they have tried to implement protections that are simply band aids rather than real solutions. Iceland is a great example of what should be done, but the Central Banks are in control and would be overrun if Europe went the way of Iceland. Spain and Italy have been pounded by sellers with the DAX finally feeling the heat. In addition, Europe is facing a EURO who has been on a tear against the Yen and US Dollar. Exporters are feeling heat and with the Eurozone needing exports to fuel their economy their currency is not helping. Price action suggests further destruction. The first week of February has not started off well with today’s move. We were quite overbought after the big move in the market from the morning of December 31st. A rest here would be normal, but with the big declines in Europe a “rest” may be quite volatility. Stick with discipline and your plane and execute! The debate over the “great rotation” continues amongst market pundits. With the Federal Reserve buying $85bln in bonds a month how will yields go higher? If you aren’t going to fight the Fed in the stock market why would you fight it in the Bond market? Just follow the trend and it will treat you well. Short term Trends: TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/4/2013 149.54 -1.12% IWM UPTREND NO CHANGE 2/4/2013 89.28 -1.21% QQQ UPTREND NO CHANGE 2/4/2013 66.48 -1.74% USO UPTREND NO CHANGE 2/4/2013 34.78 -1.61% UNG DOWNTREND CHANGE 2/4/2013 18.67 0.70% GLD DOWNTREND NO CHANGE 2/4/2013 162.00 0.34% SLV UPTREND NO CHANGE 2/4/2013 30.69 -0.29% DBC UPTREND NO CHANGE 2/4/2013 28.48 -0.35% FXY DOWNTREND NO CHANGE 2/4/2013 106.24 0.64% FXE UPTREND NO CHANGE 2/4/2013 134.06 -1.06% TLT DOWNTREND NO CHANGE 2/4/2013 115.54 1.28% UNG change in trend. Good news for those who heat their homes with natural gas!

Dollar Falls and Stocks Shake-off Intraday Sell-Off

Shaking off a late morning sell-off the market was able to rebound closing near the highs of the session as volume pushed higher on the NYSE, but flat on the NASDAQ. The EURO raced higher after comments from the ECB rate announcement pushing down the dollar index. AAPL was the catalyst for both moves in the morning and late afternoon as the stock continues to move sideways after its most recent decline. The NASDAQ and Small Caps hit new highs for the uptrend a good sign for the market in the short-term at least. Our uptrend continues to play out and barring any price destruction should continue on its merry way. Gold and silver rebounded today after their most recent sell-off. Despite the Federal Reserve signaling a possible end to QE forever the metals have been able to rebound somewhat. Crude oil once again moved higher while the rest of the commodity space remained relatively flat. The inflation trade in stocks and commodities still lives. Sentiment has crept back to lofty levels for the market, but not at the highs previously seen. The AAII bull sentiment figure jumped to 46.45. This past year the high for the index hit 51.64 back in February of 2012. The market was still able to rally higher and set a new high for the rally showing sentiment is not a reliable indicator for the market. Bears came in at 26.92 well above the 52 week low of 17.18 set back January of last year. Neither sentiment readings are at extremes, but we are close. The Investors Intelligence survey showed bulls back above 50% at 51%, but no near the high of 58% set earlier. Given the recent action and the lack of ultra-bullishness it appears this market has some room to run. Tomorrow we’ll get a reading on prices on imports and exports followed by the Treasury Budget announcement at 2pm. The deficit is expected to come in at -1 billion dollars. Many took income in the month of January rather than in 2013 due to the fiscal cliff. It will be interesting to see how much money the Treasury will be able to net. I’d think the estimates are off and likely sway when the debt ceiling debate would begin. We can only speculate at this point, but something to keep an eye on. As we ride into the weekend, we expect to see this market hit new highs and stand ready to act as necessary. Cut those losses.

Stocks Power Ahead as Strength Continues

Once again the market powers ahead in heavier trade indicating higher prices are ahead. Homebuilder sentiment came in as expected hitting 6 year highs, but a potential deal is likely in the Fiscal Cliff saga. All that matters here is we have a ton of stocks breaking out and price action in the market supporting these moves. We can debate over what printing to infinity will do to the US Dollar, but for now we have a big uptrend in our midst. At this point, not getting behind this rally will only leave you wondering later why you didn’t get on-board. Until we get distribution piled up this market is going to continue higher. The very bullish action at today’s close indicates that this uptrend is for real despite its many flaws. The biggest flaw in the market rally is the Federal Reserve debasing the US Dollar at an alarming rate. Printing more than 85 billion worth our currency and the effect it will have on our everyday life. Japan has been doing forever quantitative easing and it has failed to invigorate its economy. Maybe it will be different this time, but one thing is for sure prices all around will go higher. Initially, this will help our market given the recent price action. The real tricky piece will be when the Fed begins its exit from its endless money printing campaign. We are seeing a tremendous amount of breakouts it is a huge positive for this market. Amazing we have yet to see a true follow-through day despite today coming very close to actually being one. At this point it is about obeying the price action and knowing your exits. There are many stocks breaking out and showing tremendous strength. Ignoring the price and volume action in these names will more than likely be futile. Even if this rally only lasts a month if you have a sound exit strategy you will be out before any harm is done. Opinions mean very little in the market and the market is always right. Believe or not we have a rally and may be we’ll only squeak out a 10% rally, but one we’ll take. Remember, knowing your exits are just as important as knowing when you get into a position.

The Dow and Russell 2000 Close Positive as the NASDAQ 100 Limps into the Close

Economic news was mixed with a disappointing durable goods figure and a better than expected Kansas City Fed Manufacturing reading. The dollar rose again as the European situation continues to act as an annoyance to the market. Europeans cannot get their act together and we continue to suffer having to see it used an excuse for bad execution. Volume dropped on the day and below average showing institutions weren’t dumping stock. We have seen the market gain support at the lows in back to back sessions as a sign buyers are willing to step in. Today was day 4 of an attempted rally and we’ll be looking for a follow-through day soon if this rally has any legs. The number of AAII bulls jumped back above 30% since it hit lows last week. Bears dropped below 40%, but held just at 38%. Sentiment remains bearish, but well off the extreme levels we saw last week. The Investors Intelligence survey didn’t move much, but tilted towards the bears. Sentiment is by far from the holy grail of investing indicators, but it does help at extreme points. Last week we saw a market massively oversold and sentiment heavily skewed towards the bears. For now, we have lifted these conditions and move forward. Cloud computing stocks took it on the chin after NTAP reported earnings. The stock got hammered and two other names FFIV and VMW were handed heavy losses as well. These moves along with DELL held back the NASDAQ. FFIV may have found support at its 200 day but cloud stocks have not been the leaders like they were in October of 2010. Former leaders tend to be the best shorts and if any of these stocks give us the signal we’ll jump aboard. This market still remains in a precarious position. The S&P 500 and NASDAQ have put in a lower high (end of April) and a lower low here in May. We are in a down trending market. Remember, in the fourth year of a bull market on average a 9 month bear market occurs. Given the lower high and lower low we could be in the midst of the 9 month bear market. Anything is possible and we’ll stick by our disciplined trading no matter what the market has in store for us. Have a great memorial day weekend!